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One Laptop Per Child - the non-profit organisation aiming to give kids in the developing world their own laptops - is laying off half its staff and cutting salaries for those who are keeping their jobs.

Blaming the credit crisis, chairman and founder Nicholas Negroponte thanked those leaving for their contribution to "a noble cause".

The restructure leaves OLPC with 32 staff. It will focus on the development of its next machine XO-2 and on shipping a million XO laptops - the group has so far distributed 500,000 machines. Latin America will be spun off into a separate division while the Middle East, Afghanistan and Northwestern Pakistan "will become a major focus".

Negroponte said: "The future brings with it some uncertainty, some difficulty, but also the excitement that comes with the rededication to a cause, and a new path that will allow us to realize the moral purpose of OLPC."

The project is controversial with some development experts believing clean water, electricity and basic medicine are more important immediate requirements for kids in the developing world. What seemed like a radical idea in 2006 has also been the victim of developments in the mainstream market where the cheapest netbooks are not far from the $100 price point.

Longer term OLPC aims to bring the cost of machines down to zero for the least developed nations. It also runs a G1G1 - Give one, Get one scheme for people to buy a machine and donate one to the developing world.

The group lost several high ranking staff over its decision to work with Microsoft - the machines were launched with their own interface called Sugar which ran on Linux. We have a review of the machine here. ®